Liffe September robusta coffee ended up $30 at $2,479 on Tuesday. Market boosted by the weaker dollar. Liffe August white sugar closes $2.00 lower at $694.20 a tonne, underpinned by tight supplies. Liffe September cocoa ended 9 pounds higher at 1,802 pounds a tonne, boosted by outside markets including higher oil prices. Upside in cocoa was limited by a steady resumption of export flows from Ivory Coast after a violent political standoff ended in the top producer.
"The dollar is weakening against the euro and it seems the bulls have the wind at their backs," said Thomas Kujawa of brokerage Sucden Financial. He said talk of forecasts of rain in the centre-south of Brazil over the coming week, and heavy showers over Santos port towards the end of the week, could be a factor in the strength of the ICE July/October spread, which stood at around 50 points (0.50 cents a lb.)
Dealers voiced concerns over the impact of a prolonged dry spell on European beet areas, noting that weekend rains had been a relief. "This year we have started with a dry spell. Although not ideal, there is plenty of time for the beets to recover/develop," a European broker said. The FAO index of global food prices fell 1 percent month-on-month in May after declines in cereals and sugar prices offset gains in meat and dairy prices, the UN Food and Agriculture Organisation said on Tuesday.
Arabica coffee futures on ICE rose, supported by a shortage of high quality beans and concerns over the looming frost season in top producer Brazil. "It looks like frost worries are overdone," a London-based coffee dealer said, noting that fears of increased frost risk in Brazil appeared not to be justified.
"The situation in the cocoa market is not tight at present compared to other agricultural commodities, which speaks against a price recovery in the near term," Commerzbank said in a daily commodity market report. Dealers said the release of stocks from Ivory Coast was factored into the market and an expected 2010/11 global cocoa surplus would cap upside potential in prices.
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